KARO BIO COMPLETES NEW SHARE ISSUE AND USE AUTHORIZATION TO ISSUE ADDITIONAL SHARES

Karo Bio completes new share issue and use authorization to issue
additional shares

The Karo Bio Board of Directors has decided to issue 2 815 010 new
shares, whereby additionally MSEK 24 excluding transaction costs are
generated to the Company.

At the special general meeting August 30, 2004, it was resolved to
authorize the Board of Directors to issue an additional 2 815 010
shares, provided that the rights issue that was recently completed was
fully subscribed. The rights issue, which was fully subscribed,
generated MSEK 96 before transaction costs to Karo Bio.

The Board has on October 11, 2004 decided to use the authorization in
full. Hence, allocation of shares has been made to those who have
applied for shares without preferential right and were shareholders on
the record date September 8, 2004 and further in accordance with the
guidelines previously communicated. The subscription price is SEK 8.50,
which means that additionally MSEK 24 excluding transaction costs are
generated to Karo Bio. The new share issues generate in total
approximately MSEK 113 after transaction costs.

“The funds now generated will be important to continue investment into
our promising portfolio and to take internal projects into clinical
trials”, says Björn O. Nilsson, President and CEO.

The new shares are expected to become available for trading on the O-
list of the Stockholm Stock Exchange on or about November 9, 2004.

The total number of shares amounts to 30 965 118 shares after the
decision to issue additional shares, representing a share capital
amounting to kSEK 154 826.

ABG Sundal Collier is financial advisor to Karo Bio in this transaction.

Huddinge, October 12, 2004

KARO BIO AB

For further information, please contact
Bertil Jungmar, Chief Financial Officer, phone +46 8 608 60 52

Facts about Karo Bio

Karo Bio has operations in Huddinge, Sweden, and 79 employees.

Karo Bio has been listed on the Stockholm stock exchange (Reuters:
KARO.ST) since 1998 and maintains a leading position in the field of
drug discovery focused on nuclear receptors. Nuclear receptors are
validated drug targets for a number of clinical indications and the
Company uses proprietary technologies for the development of novel and
improved therapies for major markets.

Karo Bio has drug discovery programs in several therapeutic areas
including women’s health care, cancer, cardiovascular disease,
atherosclerosis and diabetes.

Karo Bio collaborates with major pharmaceutical companies for the
development of products and marketing. In these collaborations Karo Bio
receives upfront payments, R&D funding and milestone payments, as well
as royalties on net sales when products reach the market.

Karo Bio has strategic pharmaceutical drug discovery collaborations with
Merck & Co., Inc. and Wyeth Pharmaceuticals.

This press release is also available online at www.karobio.com and at
www.waymaker.net.

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